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UK house prices: should you worry about the General Election?

UK house prices are showing signs of recovery despite the fast pace of political events in the country, including the impending General Election on the 12th December. The most recent house price index from Nationwide reveals that the rate of house price growth increased to 0.5 per cent in November, up from 0.2 per cent in October. This is the highest rate of house price growth since April, yet buyer confidence remains low.

It is understandable that, in light of recent political events and the unpredictable outcome of the election, first-time buyers in particular are anxious and would rather wait it out than take the plunge and take out a mortgage now. But is this anxiety justified by a historical correlation between house price fluctuations and elections?

The dataexamining the behaviour of house prices around previous UK elections (taking three months either side as the time period) is clear: elections do not have a significant impact on house prices either way. There is some indication that election results may slightly affect the rate of mortgage approvals (depending on how confident mortgage lenders are feeling following the election result), but again, the rate of change isn’t significant enough to become a phenomenon that recurs during every election.

Economists at Nationwide comment, ‘It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.’

What prospective buyers do need to bear in mind is the potential for house prices to keep growing for reasons unrelated to the political situation in the country. Urban regeneration and investment in northern England, for example, are likely to see house prices increase substantially in the region over the next five years. London will inevitably continue to see house price growth thanks to fresh wave of foreign investment and the completion of transport projects such as Crossrail.

The slowing down of the pace of house growth, if only for the time being, should be welcomed by first-time buyers as an opportunity to secure a home at a time when we are seeing a relatively stable economy and steady wage growth. Our advice, as ever, is to just go for it if you are in a position to do so.

BY ANNA COTTRELL

Source: Real Homes

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UK House Prices Grow at Fastest Rate in Seven Months

Average house prices in the UK grew at their fastest rate for seven months in November but was below 1% for the twelfth month in a row, according to Nationwide.

The latest housing index from the Nationwide has revealed that average house prices grew by 0.8% in the year to November, the strongest annual increase since April. On a monthly basis, house prices grew by 0.5% in November compared to October. The average price of a home in the UK now stands at £215,734.

“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,” said Robert Gardner, chief economist at Nationwide. “To date, the slowdown has largely centred on business investment, while household spending has been more resilient.

“On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts. It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”

Howard Archer, chief economic adviser to the EY Item Club, said: “House prices can be volatile on a month-to-month basis and we would not read too much into November’s pick-up in prices reported by the Nationwide. With the economy largely struggling, Brexit uncertainties extended and the UK facing a General Election on 12 December, it seems unlikely that the housing market will see any significant pick-up in the near term at least. Consequently, annual house price increases are likely to remain limited to around one per cent in the near term.”

David Westgate, chief executive of Andrews Property Group, said: “A lot of people are fed up with the noise of politics and are getting on with their lives. Exceptionally low mortgage rates and more affordable prices are making that decision a bit easier. Some sellers are still proving stubborn on price but overall there is a bit more realism than there was earlier in the year.”

Source: Money Expert

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UK house prices won’t match low inflation until 2021

UK house prices will not match low inflation until 2021 and are set to fall in London this year as buyers are put off by continuing Brexit uncertainty, according to new research.

House prices in the capital will fall 1.5 per cent this year and only hold steady in 2020, a poll by Reuters found.

However forecasts for this year ranged from a drop of three per cent to no change, while in 2020 forecasts were between a two per cent fall to growth of five per cent.

“Until we have greater certainty regarding the political environment it isn’t possible to forecast what might happen in London with the greatest accuracy,” Rod Lockhart at property finance hub LendInvest told Reuters.

“We do not anticipate a material price rebound in London until at least 2022, although we may experience some recovery from 2021 – if and when the political ‘dust’ begins to settle.”

Last month, Foxtons, the London-focused estate agent, said revenue dropped in the third quarter as Brexit uncertainty continued to weigh on the residential property market in the capital.

Elsewhere in the UK, house prices are predicted to rise one per cent this year, 1.5 per cent next year and 2.3 per cent in 2021, according to the poll of 27 property market analysts.

Meanwhile, inflation is forecast to be 1.9 per cent, 1.9 per cent and two per cent respectively.

“Regardless of what happens with Brexit in the months ahead, a revival in the housing market is unlikely,” said Hansen Lu at Capital Economics.

“Indeed, even if a Brexit deal is implemented soon, we expect to see only a small improvement in housing market transactions and house price growth over the next two years.”

By Jessica Clark

Source: City AM

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UK house prices slip as market awaits election – RICS

A measure of British house prices edged down in October but there were signs that buyers and sellers were sitting on the sidelines at least until next month’s election, a survey published on Thursday showed.

In the latest sign of weakness in the housing market against a backdrop of Brexit uncertainty, the Royal Institution of Chartered Surveyors (RICS) said its house price index slipped to -5 from -3 in September.

That was a touch below the median forecast of -4 in a Reuters poll of economists.

New sales instructions fell for a fourth month but less severely than in September when they tumbled at the fastest pace since Britain voted to leave the EU in a referendum in 2016, and there were signs they would remain weak.

New buyer enquiries and agreed sales remained negative too.

But near-term sales expectations improved and sales were expected to be broadly stable over the next three months in most of the country, RICS said.

“The latest survey feedback continues to suggest that both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty,” Simon Rubinsohn, RICS chief economist, said.

“Given the upcoming general election next month, it appears unlikely that these trends will pick-up to any meaningful extent over the remainder of this year.”

Prime Minister Boris Johnson has called an election for Dec. 12 in an attempt to break the impasse in parliament over his plan for Brexit.

Writing by William Schomberg

Source: Yahoo Finance UK

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UK house prices show signs of recovery

UK house prices are showing signs of recovery amidst ongoing political uncertainty, with several factors supporting the property market, including a slight increase in mortgage approvals and modest wage rises.

As the latest Halifax House Price Index figures show, UK house prices have grown by 0.9 per cent between October 2018 and October 2019, with the average house price now standing at £232,249. While house prices fell by a small 0.1 per cent over the past month, they do show a quarterly rise of 0.2 per cent.

The even better news for both home owners and those intending to sell is the increased number of property transactions in September – up by 5 per cent, which is the highest level of transactions since August 2017.

However, the figures are also showing that fewer and fewer houses are being put up for sale – likely the consequence of Brexit, the election and, of course the time of year. In fact, the level of new instructions for sale is now the lowest since June 2016, with seller anxiety matching that of the immediate post-Brexit months. Buyer demand is also declining, although not as fast as the supply of housing (15 per cent vs. 37 per cent).

Russell Galley, Managing Director of Halifax, says, ‘Average house prices continued to slow in October, with a modest rise of 0.9 per cent over the past year. While this is the lowest growth seen in 2019, it again extends the largely flat trend which has taken hold over recent months.

‘A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.

‘We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.’

BY ANNA COTTRELL

Source: Real Homes

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UK house prices: Growth slows in October

Annual UK house price growth slowed last month due to ongoing political and economic uncertainty.

House prices were up just 0.9 per cent in October – the lowest growth seen so far this year – as the new uncertainty of a general election and the impending Brexit deadline hit consumer confidence.

Analysts said activity in the housing market picked up over the summer, after the date for the UK to leave the European Union was pushed back to 31 October, but growth has since slowed as potential buyers hold off making purchases.

On a monthly basis, house prices fell by 0.1 per cent, while house prices grew 0.2 per cent between August and October compared to the previous quarter.

The average house price in the UK last month was £232,249, according to the latest Halifax House Price Index.

Halifax managing director Russell Galley said: “A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.

“We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.”

Mike Scott, chief property analyst and estate agent Yopa, added: “We expect a resumption of more normal levels of housing market activity once the Brexit outcome is more settled, which may then give a short-term boost to house prices, since the stock of houses for sale is quite low, and demand can react more quickly than supply once the uncertainty is lifted.

“However, affordability continues to be stretched, especially in the south and east of the country, and we do not expect any sustained above-inflation increase in house prices. But neither do we expect a house price crash, with a no-deal Brexit now looking unlikely and the economic fundamentals remaining strong.”

By Jessica Clark

Source: City AM

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UK house prices: Growth ‘subdued’ in wake of Brexit slowdown

House price growth remained below one per cent for the 11th consecutive month in October, as hopeful homeowners sat tight amid Brexit uncertainty.

House prices in the 12 months to October rose 0.4 per cent to £215,368, according to the new figures from Nationwide.

On a monthly basis, house prices climbed 0.2 per cent.

Robert Gardner, Nationwide’s chief economist, said: “Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty.

Gardner added: “To date, the slowdown has centred on business investment, while household spending has been more resilient.”

According to Nationwide, solid labour market conditions and low borrowing costs
seem to be offsetting the drag from the uncertain economic outlook.

“The question is whether this pattern will continue,” said Gardner.

No immediate recovery in sight

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that there was “no immediate recovery in sight”.

A slowdown in hiring by companies, which has been primarily driven by uncertainty over Britain’s imminent departure from the EU, will “also likely ensure that demand remains week”, Tombs forecasted.

The latest modest rises underline concerns over a slowdown in activity in the UK’s housing market, particularly in London and the South, despite a recent improvement in earnings and employment.

“It’s hard to see the market emerging from this sub-one per cent annual growth rut until there is clarity on Brexit,” said David Westgate, chief executive of Andrews Property group.

“The sheer level of political uncertainty has left the property market in a protracted limbo.”

Data released by Rightmove earlier this month found that the price of property coming to market has endured its weakest month-on-month rise at this time of year in over a decade.

Prospective home buyers have been undeterred by the approaching Brexit deadline, while sellers have been put off by ongoing uncertainty over UK house prices, according to to the real estate platform.

North London estate agent and former Rics residential chairman Jeremy Leaf said that the data confirms “that we are not seeing or expecting to see any fireworks in the market over the next few months or at least until the smoke from the political situation begins to clear.”

Guy Harrington, chief executive of property lender Glenhawk, said that the recent news of a potential general election has added to market jitters, creating “a near perform storm of unsupportive conditions for growth”.

By Sebastian McCarthy

Source: City AM

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UK house prices grow at slowest rate for six years

UK house prices grew at their slowest annual rate in six years in September, a closely-watched gauge has revealed, as Brexit uncertainty continues to smother activity in the sector.

House prices grew by just 1.1 per cent over the last year, undershooting economists’ expectations of a rise of 1.6 per cent, Halifax’s house price index showed today. Prices rose at an annual rate of 1.8 per cent in August.

Month on month, UK house prices fell by 0.4 per cent in September, down from 0.2 per cent growth in August. The monthly figure also dropped below economists’ expectations of a 0.1 per cent rise.

Russell Galley, managing director of Halifax, said that although the 1.1 per cent annual growth is the lowest since April 2013, it “remains in keeping with the predominantly flat trend we’ve seen in recent months”.

“Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable.”

“Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists.”

Housing is just one market that has been subdued by political uncertainty in Britain. Potential buyers and sellers are putting off their decisions until there is more clarity over Brexit.

Halifax said today that recent surveys show a flatter trend in demand and lower mortgage approvals in recent months.

The UK housing market has also been hit by a global economic slowdown that has weighed on asset prices. First-time buyers will be cheered by the news that houses are not rocketing in price, however.

Andrew Montlake, managing director of UK-wide mortgage broker Coreco, said: “As we approach Halloween and the Brexit endgame it’s no surprise price growth is slowing, but the horror show many predicted hasn’t played out.”

“Extremely low borrowing costs continue to make property affordable while the strength of the jobs market is giving people confidence amid the chaos.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said low levels of activity was forcing mortgage lenders to “work incredibly hard to generate business and stand out from the competition”.

“This is excellent news for borrowers and once buyers return to the market, when the uncertainty is removed from the equation, there are some extremely competitive products for them to take advantage of.”

By Harry Robertson

Source: City AM

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House prices fall in rare September slump

Rightmove has revealed that UK house prices have decreased for the first September since 2010 as the usual autumn rebound failed to transpire.

The average price of UK property coming on the market fell by 0.2%, or £730, to £304,770, as the number of agreed sales dropped 5.5%. Underlying housing fundamentals remain strong, yet the October 31st Brexit deadline and the prospect of no-deal have discouraged buyers.

Miles Shipside, Rightmove director, said the approaching deadline was “causing some to hesitate”. If it lasts, the traditional autumn bounce in completions may be “missed altogether”.

Excluding London, the UK housing market has been somewhat resilient since the 2016 referendum. House prices in London have been in decline since March 2018, but that has been explained by a reduced interest from international buyers. Other regions have remained resilient against uncertainty.

The Rightmove figures have indicated that the intensity of no-deal Brexit concerns are impacting the larger market.

Mr Shipside said: “As the deadline gets closer and tensions heighten, there has been a big swing with sales agreed now over 5 per cent below those of a year ago. Buying activity is still at nearly 95 per cent of what it was a year ago, but sellers in all regions are seeing fewer sales go through.”

People selling property are also holding back, but prices continue to fall. The number of newly-marketed properties decreased by 7.8% this month compared with last year, with all regions down on the previous year, Rightmove found.

The most recent Office for National Statistics (ONS) data shows prices increasing 0.9% across Britain in June, but falling by 2.7% in London, continuing a trend since March 2018. Prices in the south-east decreased by 0.6% in the same month.

A total of 53% of homes were taken off the market in the most exclusive boroughs of central London instead of sold in the second quarter of the year, according to Lonres. The figure has risen gradually since 2014, when it ranged between 30 and 40%.

Marcus Dixon, head of research at Lonres, said that changes to stamp duty and the uncertainty surrounding the EU referendum in 2016 had hit the market. He said: “Indeed, since 2016 more properties have been removed from the market due to a withdrawal than a sale.”

Source: Scottish Housing News

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UK house prices remain stagnant as no-deal Brexit looms

UK house prices grew at less than one per cent for the ninth month in a row in August, Nationwide figures revealed today, prompting calls for Boris Johnson to slash stamp duty.

The value of homes did not grow between July and August, Nationwide’s House Price Index found.

But they did grow 0.6 per cent on an annual basis and 0.3 per cent over the last three months.

However, UK house prices slipped to an average price of £216,096 in August, down from July’s £217,663.

Nationwide warned that Brexit uncertainty is weighing the market down despite healthy economic signals.

“While house price growth has remained fairly stable, there have been mixed signals from the property market in recent months,” Robert Gardner, Nationwide’s chief economist, said.

No-deal Brexit threat weighs down UK house prices
While mortgage approvals have been stable and new buyer enquiries have improved, UK consumer confidence slumped in August as a no-deal Brexit looms.

The threat of Brexit uncertainty will continue to cloud the UK housing market, Gardner added.

“Housing market trends will remain heavily dependent on developments in the broader economy,” he said.

“In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity.”

Howard Archer, chief economic adviser to the EY Item Club, added: “With the economy struggling and the outlook currently highly uncertain, we suspect that house prices will remain soft despite the recent pick-up in housing market activity – which could well prove temporary.”

Could Boris Johnson cut stamp duty?
Prime Minister Boris Johnson is yet to announce his domestic agenda since he took power in July, but he is reportedly considering slashing stamp duty to boost UK house prices.

This couldn’t come soon enough, according to experts, who believe it would help lift housing stock supply and boost house price value as Johnson takes the UK closer to a no-deal Brexit.

Guy Harrington, chief executive of property lender Glenhawk, said: “The need for more stock is as urgent as ever and the government would be foolish not to address stamp duty relief as a priority.”

Archer added: “Housing market activity – and possibly to a lesser extent prices – could be given a lift in 2020 if the government cuts stamp duty significantly in the Budget later this year.”

Kevin Roberts, director of the Legal & General Mortgage Club, added: “The critical issue is that there are simply not enough homes to meet the demand from consumers, whether people buying their first property or those who want to downsize.”

By Joe Curtis

Source: City AM